Federal Laws and Incentives

Listed below are summaries of all current federal laws, incentives, regulations, and programs related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• Incentives (26)
• Laws and Regulations (17)
• Programs (14)

Incentives

Alternative Fuel Infrastructure Tax Credit

Fueling equipment for natural gas, liquefied petroleum gas (propane), electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel installed between January 1, 2006, and December 31, 2013, is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Permitting and inspection fees are not included in covered expenses. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchased qualified residential fueling equipment prior to December 31, 2013, may receive a tax credit of up to $1,000. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years. (Reference Public Law 112-240, 26 U.S. Code 30C and 38, and IRS Notice 2007-43)

Alternative Fuel Excise Tax Credit

A tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit in the amount of $0.50 per gallon is available for the following alternative fuels: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied petroleum gas, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. For an entity to be eligible to claim the credit they must be liable for reporting and paying the federal excise tax on the sale or use of the fuel in a motor vehicle. Tax exempt entities such as state and local governments that dispense qualified fuel from an on-site fueling station for use in vehicles qualify for the incentive. Eligible entities must be registered with the Internal Revenue Service (IRS). The incentive must first be taken as a credit against the entity's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits. This tax credit is applicable to fuel sold or used between January 1, 2005, and December 31, 2013. (Reference Public Law 112-240 and 26 U.S. Code 6426)

Alternative Fuel Mixture Excise Tax Credit

An alternative fuel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive on the sale or use of the alternative fuel blend (mixture) for use as a fuel in the blender's trade or business. The credit is in the amount of $0.50 per gallon of alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene. Qualified alternative fuels are: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied petroleum gas, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. The incentive must first be taken as a credit against the blender's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.This tax credit is applicable to fuel sold or used between January 1, 2005, and December 31, 2013. (Reference Public Law 112-240 and 26 U.S. Code 6426)

Alternative Fuel Tax Exemption

Alternative fuels used in a manner that the Internal Revenue Service (IRS) deems as nontaxable are exempt from federal fuel taxes. Common nontaxable uses in a motor vehicle are: on a farm for farming purposes; in certain intercity and local buses; in a school bus; exclusive use by a nonprofit educational organization; and exclusive use by a state, political subdivision of a state, or the District of Columbia. This exemption is not available to tax exempt entities that are not liable for excise taxes on transportation fuel. For more information, see IRS Publication 510, which is available via the IRS website.

Biodiesel Income Tax Credit

A taxpayer that delivers pure, unblended biodiesel (B100) into the tank of a vehicle or uses B100 as an on-road fuel in their trade or business may be eligible for an incentive in the amount of $1.00 per gallon of biodiesel, agri-biodiesel, or renewable diesel. If the biodiesel was sold at retail, only the person that sold the fuel and placed it into the tank of the vehicle is eligible for the tax credit. The incentive is allowed as a credit against the taxpayer's income tax liability. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product's biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency (EPA); and confirms that the product meets the requirements of ASTM specification D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA's fuel registration requirements and ASTM specifications D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass. This tax credit is applicable to fuel delivered between January 1, 2005, and December 31, 2013. (Reference Public Law 112-240 and 26 U.S. Code 40A)

Biodiesel Mixture Excise Tax Credit

A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. Only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender's fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product's biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency; and confirms that the product meets the requirements of ASTM specification D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA's fuel registration requirements and ASTM specifications D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass. This tax credit is applicable to fuel blended between January 1, 2005, and December 31, 2013. (Reference Public Law 112-240 and 26 U.S. Code 6426)

Hydrogen Fuel Infrastructure Tax Credit

A tax credit is available for the cost of hydrogen fueling equipment placed into service after December 31, 2005. The credit amount is up to 30% of the cost, not to exceed $30,000. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchase qualified residential fueling equipment may receive a tax credit of up to $1,000. Under current law, this credit expires December 31, 2014. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years. For more information, see IRS Form 8911, which is available via the IRS website. (Reference 26 U.S. Code 30C and 38)

Fuel Cell Motor Vehicle Tax Credit

A tax credit of up to $4,000 is available for the purchase of qualified light-duty fuel cell vehicles. Tax credits are also available for medium- and heavy-duty fuel cell vehicles; credit amounts are based on vehicle weight. Vehicle manufacturers must follow the procedures as published in Notice 2008-33 in order to certify to the Internal Revenue Service that a vehicle meets certain requirements to claim the fuel cell vehicle credit. Notice 2008-33 also provides guidance to taxpayers about claiming the credit. Under current law, this tax credit expires on December 31, 2014. For more information, see IRS Form 8910, which is available via the IRS website. (Reference 26 U.S. Code 30B)

Hydrogen Fuel Mixture Excise Tax Credit

A tax credit of $0.50 per gallon is available for the sale or use of liquefied hydrogen used to produce a mixture containing a taxable fuel. To be eligible, an alternative fuel blender must be registered with the Internal Revenue Service (IRS). The incentive must be taken as a credit against the blender's alternative fuel tax liability. Any excess over this fuel tax liability may be claimed as a direct payment from the IRS. Under current law, the credit for liquefied hydrogen expires after September 30, 2014. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, and 8849, which are available via the IRS website. (Reference 26 U.S. Code 6426)

Hydrogen Fuel Excise Tax Credit

A tax credit of $0.50 per gallon is available for liquefied hydrogen that is sold for use or used as a fuel to operate a motor vehicle. For an entity to be eligible to claim the credit they must be liable for reporting and paying the federal excise tax on the sale or use of the fuel in a motor vehicle. Tax exempt entities such as state and local governments that dispense qualified fuel from an on-site fueling station for use in vehicles qualify for the incentive. Eligible entities must be registered with the Internal Revenue Service (IRS). The incentive must first be taken as a credit against the entity's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. Under current law, the credit for liquefied hydrogen expires after September 30, 2014. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, and 8849, which are available via the IRS website. (Reference 26 U.S. Code 6426)

Qualified Plug-In Electric Drive Motor Vehicle Tax Credit

A tax credit is available for the purchase of a new qualified plug-in electric drive motor vehicle that draws propulsion using a traction battery that has at least four kilowatt hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500, based on each vehicle's traction battery capacity and the gross vehicle weight rating. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified plug-in electric drive vehicles have been sold by that manufacturer for use in the United States. This tax credit applies to vehicles acquired after December 31, 2009. For more information, see the Internal Revenue Service (IRS) Plug-In Electric Vehicle Credit website and IRS Form 8936, which is available via the IRS website.

A credit is also available for the purchase of a new qualified two- or three-wheeled plug-in electric drive vehicle that draws propulsion using a traction battery that has at least 2.5 kWh of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, is manufactured primarily for use on public roadways, and can drive at least 45 miles per hour. The credit is for 10% of the cost of the qualified vehicle, up to $2,500, and applies to vehicles acquired between January 1, 2012, and December 31, 2013.

(Reference Public Law 112-240 and 26 U.S. Code 30D)

Advanced Energy Research Project Grants

The Advanced Research Projects Agency - Energy (ARPA-E) was established within the U.S. Department of Energy with the mission to fund projects that will develop transformational technologies that reduce the nation's dependence on foreign energy imports; reduce U.S. energy related emissions, including greenhouse gases; improve energy efficiency across all sectors of the economy; and ensure that the United States maintains its leadership in developing and deploying advanced energy technologies. The ARPA-E focuses on various concepts in multiple program areas including, but not limited to, vehicle technologies, biomass energy, and energy storage. For more information, visit the ARPA-E website.

Improved Energy Technology Loans

The U.S. Department of Energy (DOE) provides loan guarantees through the Loan Guarantee Program (Program) to eligible projects that reduce air pollution and greenhouse gases, and support early commercial use of advanced technologies, including biofuels and alternative fuel vehicles. The Program is not intended for research and development projects. DOE may issue loan guarantees for up to 100% of the amount of the loan for an eligible project. For loan guarantees of over 80%, the loan must be issued and funded by the Treasury Department's Federal Financing Bank. For more information, see the Loan Guarantee Program website. (Reference 42 U.S. Code 16513)

Airport Zero Emission Vehicle (ZEV) and Infrastructure Incentives

The Zero Emissions Airport Vehicle and Infrastructure Pilot Program provides funding to airports for 50% of the cost to acquire ZEVs. The vehicles must be used in on-road applications and exclusively for airport purposes. Airports are also eligible for funding install or modify fueling infrastructure to support the vehicles involved in the project. To be eligible, an airport must be for public use. The program will give priority to applicants located in nonattainment areas, as defined by the Clean Air Act, and projects that achieve the greatest air quality benefits, as measured by the amount of emissions reduced per dollar of funds spent under the program. For more information, see the Zero Emissions Airport Vehicle and Infrastructure Pilot Program website. Reference Public Law 112-95 and 49 U.S. Code 47136a)

Advanced Biofuel Production Grants and Loan Guarantees

The Biorefinery Assistance Program (Section 9003) provides loan guarantees for the development, construction, and retrofitting of commercial-scale biorefineries that produce advanced biofuels. Grants for demonstration scale biorefineries are also available. Advanced biofuel is defined as fuel derived from renewable biomass other than corn kernel starch. Eligible applicants include, but are not limited to, individuals, state or local governments, farm cooperatives, national laboratories, institutions of higher education, and rural electric cooperatives. The maximum loan guarantee is $250 million and the maximum grant funding is 50% of project costs. Funding for this program is subject to congressional appropriations through fiscal year 2013. For more information, see the Biorefinery Assistance Program website. (Reference Public Law 112-240 and 7 U.S. Code 8103)

Advanced Biofuel Production Payments

Through the Bioenergy Program for Advanced Biofuels (Section 9005), eligible producers of advanced biofuels, or fuels derived from renewable biomass other than corn kernel starch, may receive payments to support expanded production of advanced biofuels. Payment amounts will depend on the quantity and duration of production by the eligible producer; the net nonrenewable energy content of the advanced biofuel, if sufficient data is available; the number of producers participating in the program; and the amount of funds available. No more than 5% of the funds will be made available to eligible producers with an annual refining capacity of more than 150,000,000 gallons of advanced biofuel. Funding for this program is subject to congressional appropriations through fiscal year 2013. For more information, see the Bioenergy Program for Advanced Biofuels website and contact the appropriate State Rural Development Office. (Reference Public Law 112-240 and 7 U.S. Code 8105)

Biodiesel Education Grants

Competitive grants are available through the Biodiesel Fuel Education Program (Section 9006) to educate governmental and private entities that operate vehicle fleets, the public, and other interested entities about the benefits of biodiesel fuel use. Eligible applicants are nonprofit organizations or institutes of higher education that have demonstrated knowledge of biodiesel fuel production, use, or distribution; and have demonstrated the ability to conduct educational and technical support programs. Funding for this program is subject to congressional appropriations through fiscal year 2013. (Reference Public Law 112-240 and 7 U.S. Code 8106)

Biomass Research and Development Initiative

The U.S. Department of Agriculture's National Institute of Food and Agriculture, in conjunction with U.S. Department of Energy Office of Biomass Programs, provides grant funding for projects addressing research, development, and demonstration of biofuels and biobased projects and the methods, practices, and technologies for their production, under the Biomass Research and Development Initiative (Section 9008). The competitive award process focuses on three main technical areas: feedstock development; biofuels and biobased products development; and biofuels development analysis. Eligible applicants are institutions of higher learning, national laboratories, federal research agencies, private sector entities, and nonprofit organizations. The non-federal share of the total project cost must be at least 20%. Funding for this program is subject to congressional appropriations through fiscal year 2013. For more information, see the Biomass Research & Development website. (Reference Public Law 112-240 and 7 U.S. Code 8108)

Ethanol Infrastructure Grants and Loan Guarantees

The Rural Energy for America Program (REAP) provides loan guarantees and grants to agricultural producers and rural small businesses to purchase renewable energy systems or make energy efficiency improvements. Eligible renewable energy systems include flexible fuel pumps, or blender pumps, that dispense intermediate ethanol blends. The maximum loan guarantee is $25 million and the maximum grant funding is 25% of project costs. At least 20% of the grant funds awarded must be for grants of $20,000 or less. Funding for this program is subject to congressional appropriations through fiscal year 2013. For more information, see the REAP website. (Reference Public Law 112-240 and 7 U.S. Code 8107)

Biobased Transportation Research Funding

The Surface Transportation Research, Development, and Deployment (STRDD) Program funds activities that promote innovation in transportation infrastructure, services, and operations. A portion of the funding made available to the STRDD Program is set aside for the Biobased Transportation Research program to carry out biobased research of national importance at research centers and through the National Biodiesel Board. For more information, see the STRDD Program website. (Reference 23 U.S. Code 502 and 7 U.S. Code 8109)

Alternative Fuel and Advanced Vehicle Technology Research and Demonstration Bonds

Qualified state, tribal, and local governments may issue Qualified Energy Conservation Bonds subsidized by the U.S. Department of Treasury at competitive rates to fund capital expenditures on qualified energy conservation projects. Eligible activities include research and demonstration projects related to cellulosic ethanol and other non-fossil fuels, as well as advanced battery manufacturing technologies. Government entities may choose to issue tax credit bonds or direct payment bonds to subsidize the borrowing costs. For information on eligibility, processes, and limitations, see IRS Notices 2009-29, 2010-35, and 2012-44 or contact local issuing agencies. (Reference 26 U.S. Code 54D)

Advanced Biofuel Feedstock Incentives

The Biomass Crop Assistance Program (BCAP; Section 9010) provides financial assistance to landowners and operators that establish, produce, and deliver biomass feedstock crops for advanced biofuel production facilities. Qualified feedstock producers are eligible for a reimbursement of 75% of the cost of establishing a biomass feedstock crop, as well as annual payments for up to five years for herbaceous feedstocks and up to 15 years for woody feedstocks. The annual payment values are determined based primarily on the crop value; producers receive 99% of the value if the biomass is harvested to produce cellulosic biofuels that meet the U.S. Environmental Protection Agency's Renewable Fuels Standard Program standards, 90% if it is harvested for other advanced biofuels, and 75% if it is harvested for heat, power, or biobased products. In addition, BCAP provides qualified biomass feedstock crop producers matching payments for the collection, harvest, storage, and transportation of their crops to advanced biofuel production facilities for up to two years. The matching payments are $1 for each $1 per dry ton paid by a qualified advanced biofuel production facility, up to $45 per dry ton. For more information, see the Biomass Crop Assistance Program website. (Reference 7 U.S. Code 8111)

Advanced Technology Vehicle (ATV) Manufacturing Incentives

Through the Advanced Technology Vehicles Manufacturing Loan Program, ATV and ATV components manufacturers may be eligible for direct loans for up to 30% of the cost of re-equipping, expanding, or establishing manufacturing facilities in the United States used to produce qualified ATVs or ATV components. Qualified ATVs are light-duty vehicles or ultra-efficient vehicles that meet specified federal emission standards and fuel economy requirements. Ultra-efficient vehicles are fully closed compartment vehicles, designed to carry at least two adult passengers, that achieve at least 75 miles per gallon while operating on gasoline or diesel fuel, as hybrid electric vehicles operating on gasoline or diesel fuel, or as fully electric vehicles. Qualified components must be designed for ATVs and installed for the purpose of meeting ATV performance requirements, as determined by the U.S. Department of Energy. For more information, see the Advanced Technology Vehicles Manufacturing Loan Program website. (Reference 42 U.S. Code 17013)

Idle Reduction Technology Excise Tax Exemption

Qualified on-board idle reduction devices and advanced insulation are exempt from the federal excise tax imposed on the retail sale of heavy-duty highway trucks and trailers. The exemption also applies to the installation of qualified equipment on vehicles after the vehicles have been placed into service. For a list of eligible products and additional information about product exemption eligibility criteria, see the U.S. Environmental Protection Agency's (EPA) SmartWay Technology Program Federal Excise Tax Exemption website. The exemption applies to equipment that was determined by the Administrator of the EPA, in consultation with the Secretary of Energy and the Secretary of Transportation, to reduce the idling of the tractor at a motor vehicle rest stop or other location where such vehicles are temporarily parked or remain stationary. Only equipment sold on or after October 4, 2008, is eligible. For more information, see IRS Publication 510 and the instructions for IRS Form 720, which are available via the IRS website. (Reference 26 U.S. Code 4053)

Second Generation Biofuel Plant Depreciation Deduction Allowance

A second generation biofuel production plant placed into service between December 20, 2006, and December 31, 2013, may be eligible for an additional depreciation tax deduction allowance equal to 50% of the adjusted basis of the property. The plant must be solely used to produced second generation biofuel and is only eligible for the depreciation allowance for the first year in operation. Second generation biofuel is defined as liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable basis or any cultivated algae, cyanobacteria, or lemna. (Reference Public Law 112-240 and 26 U.S. Code 168)

Second Generation Biofuel Producer Tax Credit

A second generation biofuel producer that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of up to $1.01 per gallon of second generation biofuel that is: sold and used by the purchaser in the purchaser's trade or business to produce a second generation biofuel mixture; sold and used by the purchaser as a fuel in a trade or business; sold at retail for use as a motor vehicle fuel; used by the producer in a trade or business to produce a second generation biofuel mixture; or used by the producer as a fuel in a trade or business. If the second generation biofuel also qualifies for alcohol fuel tax credits, the credit amount is reduced to $0.46 per gallon for biofuel that is ethanol and $0.41 per gallon if the biofuel is not ethanol. Second generation biofuel is defined as liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable basis or any cultivated algae, cyanobacteria, or lemna. To qualify, fuel must also meet the U.S. Environmental Protection Agency fuel and fuel additive registration requirements. Alcohol with a proof of less than 150, fuel with a water or sediment content of more than 4%, and fuel with an ash content of more than 1% are not considered second generation biofuels. The incentive is allowed as a credit against the producer's income tax liability. Under current law, only qualified fuel produced in the United States between January 1, 2009, and December 31, 2013, for use in the United States may be eligible. For more information, see IRS Publication 510 and IRS Forms 637 and 6478, which are available via the IRS website. (Reference Public Law 112-240 and 26 U.S. Code 40)

Laws and Regulations

Alternative Fuel Definition - Internal Revenue Code

The Internal Revenue Service (IRS) defines alternative fuels as liquefied petroleum gas (propane), compressed natural gas, liquefied natural gas, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels. Biodiesel, ethanol, and renewable diesel are not considered alternative fuels by the IRS. While the term "hydrocarbons" includes liquids that contain oxygen, hydrogen, and carbon and as such "liquid hydrocarbons derived from biomass" includes ethanol, biodiesel, and renewable diesel, the IRS specifically excluded these fuels from the definition. (Reference 26 U.S. Code 6426)

Vehicle Acquisition and Fuel Use Requirements for Federal Fleets

Under the Energy Policy Act (EPAct) of 1992, 75% of new light-duty vehicles acquired by covered federal fleets must be alternative fuel vehicles (AFVs). As amended in January 2008, Section 301 of EPAct 1992 defines AFVs to include hybrid electric vehicles, fuel cell vehicles, and advanced lean burn vehicles. Federal fleets are also required to use alternative fuels in dual-fuel vehicles unless the U.S. Department of Energy (DOE) determines an agency qualifies for a waiver; grounds for a waiver include the lack of alternative fuel availability and cost restrictions. Fleets that use fuel blends containing at least 20% biodiesel (B20) may earn credits toward their annual requirements. Additionally, Executive Order 13423, issued in January 2007, requires federal agencies with 20 vehicles or more in their U.S. fleet to decrease petroleum consumption by 2% per year, relative to their Fiscal Year (FY) 2005 baseline, through FY 2015. Agencies must also continue to increase their alternative fuel use by 10% per year, relative to the previous year, based on a FY 2005 baseline.

Executive Order 13514, issued in October 2009, requires each federal agency to develop, implement, and annually update a Strategic Sustainability Performance Plan. Federal agencies must measure, reduce, and report their greenhouse gas (GHG) emissions, with an overall federal government direct GHG emissions reduction goal of 28% by 2020, relative to a FY 2008 baseline. Federal fleets of 20 vehicles or more must reduce petroleum consumption by a minimum of 2% per year through the end of FY 2020 as compared to 2005 baseline usage. Each agency must establish a comprehensive inventory of GHG emissions for FY 2010, to be updated on an annual basis thereafter. Reductions may be achieved through a variety of measures including the use of AFVs, and fleet optimization efforts.

Additional requirements for federal fleets were included in the Energy Independence and Security Act of 2007, including fleet management plan requirements (Section 142), low GHG emitting vehicle acquisition requirements (Section 141), and renewable fuel infrastructure installation requirements (Section 246). As of December 2012, DOE is developing a rulemaking on the alternative fuel increase requirements (Section 142).

For more information, visit the Sustainable Federal Fleets website.

(Reference 42 U.S. Code 13212, Executive Order 13423, and Executive Order 13514)

Vehicle Acquisition and Fuel Use Requirements for State and Alternative Fuel Provider Fleets

Under the Energy Policy Act (EPAct) of 1992, certain state government and alternative fuel provider fleets are required to acquire alternative fuel vehicles (AFVs). Compliance is required by fleets that operate, lease, or control 50 or more light-duty vehicles within the U.S. Of those 50 vehicles, at least 20 must be used primarily within a single Metropolitan Statistical Area/Consolidated Metropolitan Statistical Area. Those same 20 vehicles must also be capable of being centrally fueled. Covered fleets earn credits for each vehicle purchased, and credits earned in excess of their requirements can be banked or traded with other fleets. Additionally, fleets that use fuel blends containing at least 20% biodiesel (B20) in medium- and heavy-duty vehicles may earn credits toward their annual AFV acquisition requirements.

On March 20, 2007, the U.S. Department of Energy (DOE) issued a final rule on Alternative Compliance, which allows fleets the option to choose a petroleum reduction path in lieu of acquiring AFVs. Interested fleets must obtain a waiver from DOE by proving that they will achieve petroleum reductions equivalent to that achieved by having AFVs running on alternative fuels 100% of the time. For more information, visit the EPAct State and Alternative Fuel Provider Fleets website. (Reference 42 U.S. Code 13251 and 13263a, and 10 CFR 490)

Vehicle Acquisition and Fuel Use Requirements for Private and Local Government Fleets

Under the Energy Policy Act (EPAct) of 1992, the U.S. Department of Energy (DOE) was directed to determine whether private and local government fleets should be mandated to acquire alternative fuel vehicles (AFVs). In January 2004, DOE published a final rule announcing its decision not to implement an AFV acquisition mandate for private and local government fleets. In response to a March 2006 ruling by a U.S. District Court, DOE issued a subsequent final rulemaking on the new Replacement Fuel Goal in March 2007, which extended the EPAct 1992 goal to 2030. The goal is to achieve a domestic production capacity for replacement fuels sufficient to replace 30% of the U.S. motor fuel consumption. In March 2008, DOE issued its determination not to implement a fleet compliance mandate for private and local government fleets, concluding that such a mandate is not necessary to achieve the Replacement Fuel Goal. For more information on the Private and Local Government Fleet Rule compliance, visit the EPAct Private and Local Government Fleet Determination website. (Reference 42 U.S. Code 13257)

Alternative Fuel Definition

The following fuels are defined as alternative fuels by the Energy Policy Act (EPAct) of 1992: pure methanol, ethanol, and other alcohols; blends of 85% or more of alcohol with gasoline; natural gas and liquid fuels domestically produced from natural gas; liquefied petroleum gas (propane); coal-derived liquid fuels; hydrogen; electricity; pure biodiesel (B100); fuels, other than alcohol, derived from biological materials; and P-Series fuels. In addition, the U.S. Department of Energy may designate other fuels as alternative fuels, provided that the fuel is substantially nonpetroleum, yields substantial energy security benefits, and offers substantial environmental benefits. For more information, see the EPAct website. (Reference 42 U.S. Code 13211)

Renewable Fuel Standard (RFS) Program

The national RFS Program was developed to increase the volume of renewable fuel that is blended into transportation fuels. As required by the Energy Policy Act of 2005, the U.S. Environmental Protection Agency (EPA) finalized RFS Program regulations, effective September 1, 2007. The Energy Independence and Security Act of 2007 increased and expanded this standard. By 2022, 36 billion gallons of renewable fuel must be used per year. A certain percentage of the renewable fuel blended into transportation fuels must be cellulosic biofuel, biomass-based diesel, and advanced biofuel. Cellulosic biofuel is defined as any renewable fuel derived from cellulose, hemicellulose, or lignin, and achieves a 60% greenhouse gas (GHG) emissions reduction. Biomass-based diesel is defined as a renewable transportation fuel, transportation fuel additive, heating oil, or jet fuel that meets the definition of either biodiesel or non-ester renewable diesel, and achieves a 50% GHG emissions reduction. If intended for use in a motor vehicle it must also be registered with EPA as a motor vehicle fuel or fuel additive. Renewable fuel that is co-processed with petroleum is not considered biomass-based diesel. Advanced biofuel is defined as any renewable fuel, other than ethanol derived from corn, and achieves a 50% GHG emissions reduction.

Each year, EPA will determine the Renewable Volume Obligation (RVO) for parties required to participate in the RFS Program. This standard is calculated as a percentage, by dividing the amount of renewable fuel (gallons) required by the RFS to be blended into gasoline for a given year by the amount of gasoline/transportation fuel expected to be used during that year. Any party that produces gasoline for use in the United States, including refiners, importers, and blenders (other than oxygenate blenders), is considered an obligated party under the RFS Program. Parties that do not produce, import, or market fuels within the 48 contiguous states are exempt from the renewable fuel tracking program.

To facilitate and track compliance with the RFS, a producer or importer of renewable fuel must generate Renewable Identification Numbers (RINs) to represent renewable fuels produced or imported by the entity on or after September 1, 2007, assigned by gallon or batch. Assigned RINs are transferred when ownership of a batch of fuel occurs, but not when fuel only changes custody. A trading program is in place to allow obligated parties to comply with the annual RVO requirements through the purchase of RINs. Obligated parties must register with EPA in order to participate in the trading program. For each calendar year, an obligated party must demonstrate that it has sufficient RINs to cover its RVO. RINs may only be used for compliance purposes in the calendar year they are generated or the following year. Obligated parties must report their ownership of RINs to EPA's Office of Transportation and Air Quality on a quarterly and annual basis.

For more information, see the RFS Program website.

(Reference 42 U.S. Code 7545(o) and 40 CFR 80.1100-80.1167)

Fuel Economy Test Procedures and Labeling

The U.S. Environmental Protection Agency (EPA) is responsible for motor vehicle fuel economy testing. Manufacturers test their own vehicles and report the results to the EPA. The EPA reviews the results and confirms a portion of them using their own testing facilities. To aid consumers shopping for new vehicles, the EPA redesigned the fuel economy window sticker posted on all new cars and light trucks starting with Model Year 2013 vehicles to be easier to read and understand. The EPA also redesigned fuel economy window stickers for electric and other advanced vehicles. The EPA is responsible for providing the posted fuel economy data and does so through the FuelEconomy.gov website. For more information, visit EPA's Fuel Economy website. (Reference 40 CFR 600)

Tier 2 Vehicle and Gasoline Sulfur Program

The Tier 2 Vehicle and Gasoline Sulfur Program requires new passenger vehicles, including sport utility vehicles, pick-up trucks, and vans, to meet stringent emissions standards. New emission standards apply to all light vehicles, regardless of whether they run on gasoline, diesel, or alternative fuels. Additionally, this program requires gasoline refiners and importers to reduce the sulfur content of gasoline sold in the United States. For more information, see the Tier 2 Vehicle and Gasoline Sulfur Program website. (Reference 42 U.S. Code 7521)

Aftermarket Alternative Fuel Vehicle (AFV) Conversions

Conventional original equipment manufacturer vehicles altered to operate on propane, natural gas, methane gas, ethanol, or electricity are classified as aftermarket AFV conversions. All vehicle conversions, except those that are completed for a vehicle to run on electricity, must meet current applicable U.S. Environmental Protection Agency (EPA) standards. For more information about vehicle conversion certification requirements, see the Alternative Fuels Data Center's Vehicle Conversions website and EPA's Alternative Fuel Conversion website. (Reference 40 CFR 85)

Alternative Fuel and Vehicle Labeling Requirements

Alternative fuel vehicles (AFVs) and fuel dispensers must be labeled with information to help consumers make informed decisions about buying or fueling a vehicle. All new and used AFVs, including vehicles with an aftermarket conversion system installed, must be clearly labeled with the vehicle's cruising range as estimated by the manufacturer, as well as other descriptive information. The labeling requirements do not apply to hybrid electric vehicles. Alternative fuel dispensers must also be clearly labeled with the name of the fuel and fuel rating. This rule applies to, but is not limited to, the following fuel types: methanol, denatured ethanol, and/or other alcohols; mixtures containing 85% or more by volume of methanol, denatured ethanol, and/or other alcohols; natural gas; liquefied petroleum gas; hydrogen; coal derived liquid biofuels; biodiesel blends containing more than 5% biodiesel by volume; and electricity. (Reference 16 CFR 306 and 309)

Greenhouse Gas (GHG) Reporting Requirement

Vehicle and engine manufacturers are required to report annual GHG emissions to the U.S. Environmental Protection Agency (EPA). Vehicle and engine manufacturers outside of the light-duty sector are required to report carbon dioxide emissions levels beginning with Model Year 2011 and other GHG emissions in subsequent model years. This includes heavy trucks, motorcycles, and non-road engines and equipment. The reporting requirement also applies to suppliers of fossil fuels or industrial GHGs and facilities that emit at least 25,000 metric tons of carbon dioxide equivalent per year. For more information, see EPA's Greenhouse Gas Reporting Program website. (Reference 40 CFR 86-90, 94, 98, 1033, 1039, 1042, 1045, 1048, 1051, 1054, and 1065)

Vehicle Fuel Economy and Greenhouse Gas Emissions Standards

Vehicle manufacturers must meet fuel economy and greenhouse gas (GHG) emissions standards for vehicles sold in the United States. The U.S. Department of Transportation's (DOT) National Highway Traffic Safety Administration (NHTSA) regulates fuel economy standards, while the U.S. Environmental Protection Agency (EPA) regulates GHG emissions.

NHTSA's Corporate Average Fuel Economy (CAFE) program and EPA's light-duty vehicle GHG emissions program set standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles. By Model Year (MY) 2025, these vehicles must meet an estimated combined average fuel economy of 48.7 to 49.7 miles per gallon or higher. The standards provide flexibility to manufacturers, including the ability to earn credits for alternative fuel vehicles. For more information on the standards through MY2016, see the final rule in the Federal Register. For more information on the standards from MY2017 through MY2025, see the final rule in the Federal Register.

NHTSA and EPA also regulate fuel economy and GHG emissions for on-road vehicles with a gross vehicle weight rating (GVWR) of 8,500 pounds or greater and the engines that power them. For MY2014 through MY2018 heavy-duty vehicles and medium-duty vehicles that are not already covered by the standards described above, manufacturers must meet increasingly stringent fuel economy and GHG emissions standards tailored to each of three main regulatory subcategories: combination tractors (also known as semi trucks); heavy-duty pickup trucks and vans; and vocational vehicles (such as delivery, refuse, and tow trucks; transit, shuttle, and school buses; and emergency vehicles). The standards provide flexibility, allowing for emissions and/or fuel consumption credits to be averaged, banked, or traded. For more information, refer to the final rule in the Federal Register.

For more information, see the EPA's Regulations and Standards website and NHTSA's CAFE website. (Reference 40 CFR 85-86, 600, 1033, 1036-1037, 1039, 1065-1066, and 1068; 49 CFR 523, 531, 533-534, and 537-538; and 49 U.S. Code Chapter 329)

High Occupancy Vehicle (HOV) Lane Exemption

States are allowed to exempt certified low emission and energy-efficient vehicles from HOV lane requirements within the state. Eligible vehicles must be certified by the U.S. Environmental Protection Agency (EPA) and appropriately labeled for use in HOV lanes. The U.S. Department of Transportation is responsible for planning and implementing HOV programs, including the exemption criteria established by EPA. States that choose to adopt these requirements will be responsible for enforcement and vehicle labeling. The HOV exemption for low emission and energy-efficient vehicle expires September 30, 2017. (Reference Public Law 112-141 and 23 U.S. Code 166)

Idle Reduction Technology Weight Exemption

States may allow heavy-duty vehicles equipped with idle reduction technology to exceed the maximum gross vehicle weight limit and the axle weight limit by up to 400 pounds (lbs) to compensate for the additional weight of the idle reduction technology. Effective October 1, 2012, the total allowable weight exemption for idle reduction technology will increase to 550 lbs. This allowance does not impact state highway funding eligibility. (Reference Public Law 112-141 and 23 U.S. Code 127(a)(12))

Vehicle Incremental Cost Allocation

The U.S. General Services Administration (GSA) must allocate the incremental cost of purchasing alternative fuel vehicles (AFVs) across the entire fleet of vehicles distributed by GSA. This mandate also applies to other federal agencies that procure vehicles for federal fleets. For more information, see the GSA's AFV website. (Reference 42 U.S. Code 13212 (c))

Procurement Preference for Electric and Hybrid Electric Vehicles

The U.S. Department of Defense (DOD) must exhibit a preference for the lease or procurement of motor vehicles with electric or hybrid electric propulsion systems, including plug-in hybrid systems. Tactical vehicles designed for use in combat are excluded from the requirement. DOD must establish regulations to implement the electric vehicle preference. (Reference 10 U.S. Code 2922g)

Renewable Fuels Assessment

The U.S. Department of Defense (DOD) prepared a report, Opportunities for DOD Use of Alternative and Renewable Fuels, on the use and potential use of renewable fuels in meeting DOD's energy requirements for the Senate and House of Representatives Armed Services Committees. The report assessed the use of renewable fuels, including domestically produced algae-based fuels, biodiesel, and biomass derived fuels, as alternative fuels in ground transportation, aviation, and maritime fleets. The report also assessed the potential benefit of establishing a renewable fuel commodity class that is distinct from petroleum-based products. DOD also incorporated alternative fuels into the Operational Energy Strategy and the associated Implementation plan. For more information, see the DOD Office of the Assistant Secretary of Defense for Operational Energy Plans and Programs website. (Reference Public Law 111-84, Section 334)

Programs

Clean Cities

The mission of Clean Cities is to advance the energy, economic, and environmental security of the United States by supporting local initiatives to adopt practices that reduce the use of petroleum in the transportation sector. Clean Cities carries out this mission through a network of nearly 100 volunteer coalitions, which develop public/private partnerships to promote alternative fuels and advanced vehicles, fuel blends, fuel economy, hybrid vehicles, and idle reduction. Clean Cities provides information about financial opportunities, coordinates technical assistance projects; updates and maintains databases and websites, and publishes fact sheets, newsletters, and related technical and informational materials. For more information, see the Clean Cities website.

State Energy Program (SEP) Funding

SEP provides grants to states to assist in designing, developing, and implementing renewable energy and energy efficiency programs. Each state's energy office receives SEP funding and manages all SEP-funded projects. States may also receive project funding from technology programs in the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) for SEP Special Projects. EERE distributes the funding through an annual competitive solicitation to state energy offices. For more information, see the SEP website.

National Clean Diesel Campaign (NCDC)

The NCDC was established by the U.S. Environmental Protection Agency to reduce pollution emitted from diesel engines through the implementation of varied control strategies and the involvement of national, state, and local partners. The NCDC includes programs for existing diesel fleets, regulations for clean diesel engines and fuels, and regional collaborations and partnerships. For information on available grants and funding opportunities, see the NCDC Grants & Funding website.

SmartWay Transport Partnership

The SmartWay Transport Partnership is a voluntary partnership between the U.S. Environmental Protection Agency (EPA) and the domestic freight industry. This public-private partnership was designed to reduce greenhouse gases and air pollution through increased fuel efficiency. EPA provides partners with benefits and services that include fleet management tools, technical support, information, public recognition, and use of the SmartWay Transport Partner logo as a mark of excellence. The SmartWay Transport Partnership is working with partners to develop advanced technologies and operational practices that save fuel and reduce emissions. Grants are available to states, nonprofits, and academic institutions to demonstrate innovative idle reduction technologies for the trucking industry. For more information, see the SmartWay Transport Partnership website.

Clean School Bus USA

Clean School Bus USA is a public-private partnership that focuses on reducing children's exposure to harmful diesel exhaust by limiting school bus idling, implementing pollution reduction technologies, improving route logistics, and switching to clean fuels. Clean School Bus USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign and provides funding for projects designed to retrofit and/or replace older diesel school buses. Eligible applicants are school districts, state and local government programs, federally recognized Indian tribes, and non-profit organizations. For more information, see the Clean School Bus USA website.

Clean Ports USA

Clean Ports USA is an incentive-based program designed to reduce emissions by encouraging port authorities and terminal operators to retrofit and replace older diesel engines with new technologies and use cleaner fuels. The U.S. Environmental Protection Agency's National Clean Diesel Campaign offers funding to port authorities and public entities to help them overcome barriers that impede the adoption of cleaner diesel technologies and strategies. For more information, see the Clean Ports USA website.

Clean Construction USA

Clean Construction USA is a voluntary program that promotes the reduction of diesel exhaust emissions from construction equipment and vehicles by encouraging proper operations and maintenance, use of emissions-reducing technologies, and use of cleaner fuels. Clean Construction USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign, which offers funding for clean diesel construction equipment projects. For more information, see the Clean Construction USA website.

Clean Agriculture USA

Clean Agriculture USA is a voluntary program that promotes the reduction of diesel exhaust emissions from agricultural equipment and vehicles by encouraging proper operations and maintenance by farmers, ranchers, and agribusinesses, use of emissions-reducing technologies, and use of cleaner fuels. Clean Agriculture USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign, which offers funding for clean diesel agricultural equipment projects. For more information, see the Clean Agriculture USA website.

Pollution Prevention Grants Program

The Pollution Prevention (P2) Grants Program supports state and tribal technical assistance, education, and research programs that help businesses and industries identify better environmental strategies and solutions for complying with federal and state environmental regulations. Eligible applicants include states, U.S. territories, and qualified state agencies, and colleges and universities. Local governments, private universities, private nonprofit organizations, private businesses, and individuals are not eligible for funding. Matching funds will be awarded and managed by the U.S. Environmental Protection Agency's regional P2 program offices. Grant amounts awarded are dependent on Congressional appropriations for this program. For more information, see the P2 Program website. (Reference 42 U.S. Code 13104)

Air Pollution Control Program

The Air Pollution Control Program assists state, local, and tribal agencies in planning, developing, establishing, improving, and maintaining adequate programs for prevention and control of air pollution or implementation of national air quality standards. Plans may emphasize alternative fuels, vehicle maintenance, and transportation choices to reduce vehicle miles traveled. Eligible applicants may receive federal funding for up to 60% of project costs to implement their plans. (Reference 42 U.S. Code 7405)

National Fuel Cell Bus Program (NFCBP)

The goal of the NFCBP is to facilitate the development of commercially viable fuel cell bus technologies and related infrastructure with funding awarded through a competitive grant process. Priority consideration is given to applicants that have successfully managed advanced transportation technology projects, including projects related to hydrogen and fuel cell public transportation operations, for a period of at least five years. A minimum 50% non-federal cost share is required. For more information, see the NFCBP website. (Reference 49 U.S. Code 5309)

Congestion Mitigation and Air Quality (CMAQ) Improvement Program

The CMAQ Improvement Program provides funding to state departments of transportation (DOTs), municipal planning organizations (MPOs), and transit agencies for projects and programs in air quality nonattainment and maintenance areas that reduce transportation-related emissions. Eligible activities include transit improvements, travel demand management strategies, traffic flow improvements, purchasing idle reduction technology, development of alternative fueling infrastructure, conversion of public fleet vehicles to operate on cleaner fuels, and outreach activities that provide assistance to diesel equipment and vehicle owners and operators regarding the purchase and installation of diesel retrofits. State DOTs and MPOs must give priority to projects and programs to include diesel retrofits and other cost-effective emissions reduction activities, and cost-effective congestion mitigation activities that provide air quality benefits. For more information, see the CMAQ Improvement Program website. (Reference Public Law 112-141, and 23 U.S. Code 149)

Voluntary Airport Low Emission (VALE) Program

The goal of the VALE Program is to reduce ground level emissions at commercial service airports located in designated ozone and carbon monoxide air quality nonattainment and maintenance areas. The VALE Program provides funding through the Airport Improvement Program and the Passenger Facility Charges program for the purchase of low-emission vehicles, development of fueling and recharging stations, implementing gate electrification, and other airport air quality improvements. For more information, see the VALE Program website. (Reference 49 U.S. Code 40101)

Transit Emissions and Energy Reduction Assistance

The Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) Program works with public transit agencies to implement strategies for reducing greenhouse gas emissions and energy use from transit agency operations. Strategies may be implemented through operational or technological enhancements and electric drive projects are specifically encouraged. Eligible projects include on-board vehicle energy management such as energy storage, regenerative braking, fuel cells, and turbines; accessory electrification; vehicle and locomotive design including lightweight materials; and rail transit energy management such as regenerative braking and solar propulsion engine systems. For more information, see the TIGGER Program website.